China's CPI hits three-year high of 6.4% in June

Xinhua, July 9, 2011

China's consumer price index (CPI), the main gauge of inflation, rose 6.4 percent year-on-year in June, the highest level since June 2008, the National Bureau of Statistics (NBS) said Saturday.

Of the 6.4 percent CPI growth in June, 3.7 percentage points were contributed by the carryover effect of price increases last year, the NBS said in a statement on its website.

Food prices, which account for nearly one third of the basket of goods in the nation's CPI calculation, jumped 14.4 percent in June from the same month last year, a pace faster than May's 11.7 percent.

Growth in non-food prices also accelerated to 3 percent in June, up from 2.9 percent in May from a year earlier.

In terms of regions, the CPI rose 6.2 percent year-on-year in China's urban areas and the growth in the rural areas was 7.0 percent, according to the NBS.

On a month-on-month basis, food prices added 0.9 percent from May, with the pork prices jumping 11.4 percent from May. Month-on-month price declines were reported in vegetables and fruits. Non-food prices were flat in June as compared with May.

"We don't have to panic about the June CPI figure," said Zhang Liqun, a macroeconomic analyst with the State Council Development Research Center, China's top government think-tank.

"A CPI growth above 6 percent does not mean the inflation situation is worsening in China, because 3.7 percentage points of the increase were contributed by the carryover effect," Zhang said.

He said the carryover effect peaked in June and new factors that push up prices have been under the government's control.

Except for pork, the supplies of other food are improving and will help ease inflation pressure, Zhang added.